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Open Innovation in EVs

A Case Study of Tesla Motors

Written by A. Karamitsios

Paper category

Master Thesis






Thesis: Innovation Innovation can be considered as a new combination of old or recently acquired knowledge and technology (Miller and Olleros, 2007): • New products (services) • New processes • New markets • New raw materials resources • New organizational forms of electric vehicles Open innovation: The Tesla Motors 8 innovation case study can also be defined as a force driving economic growth; it has played a key role in the success of many companies such as Apple, Google, Amazon, Honda, and Procter & Gamble. Innovation shapes the modern market and continues to define leading companies in each market segment. However, it is extremely difficult for a company to continuously innovate. The challenge the company faces today is to be able to manage the constant changes in technology and the industry, and to stimulate innovation and creativity. It is important not only to be able to have new ideas, but also to be able to use them commercially (Rothaermel, 2010). Each company follows a different strategy when pursuing innovation. Miller and Olleros (2007) believe that the logic behind the innovation strategy includes the following key elements: • Patent-driven discovery • Cost-based competition • System integration • System engineering and consulting • Platform orchestration • Customized mass production • Innovation support and service companies should Have a clear vision to separate the innovation strategies they will pursue and how they will combine different innovation strategies (Miller and Olleros, 2007). In addition, Tidd and Bessant (2005) emphasized that when talking about innovation, we are essentially talking about change. Francis and Bessant (2005) focus on four categories (4Ps of innovation): • Product innovation-changes in the things (products/services) provided by the organization; • Process innovation-changes in the way they create and deliver; • Positioning innovation- —Changes in the background of introducing products/services; paradigm innovation—changes in the basic psychological model that constitutes organizational behavior. 2.2 Closed and open innovation According to the research of Chesbrough (2003), companies in the high-end technology industry have fundamentally changed their way of innovation. These companies have transformed their innovation strategy from a closed innovation model to an open innovation model. Since then, many researchers have paid great attention to this paradigm shift from closed to open innovation (Herzog, 2011). The closed innovation flow chart is shown in Figure 1.1. There are several logical facts that have brought the theory of open innovation to the surface. First of all, many good ideas are now widely spread. 2.3 Open Innovation Today, open innovation constitutes one of the main topics of innovation management. The basic condition of open innovation is to open the innovation process. Generally speaking, it is defined as: "Use purposeful knowledge inflow and outflow to accelerate internal innovation, respectively, and expand the market for external use of innovation" (Chesbrough et al., 2006). Generally, compare open innovation with closed innovation. The open innovation flow chart is shown in Figure 1.2. 2.3.1 Process classification The concept of open innovation is quite extensive, and there are multiple classification methods. From the perspective of the innovation process of an enterprise, there are two main categories of open innovation. Open innovation based on the outside-in process and open innovation based on the inside-out process (Chiaroni et al., 2010). The outside-in process aims to increase the company's knowledge, combining knowledge from customers, suppliers, and external sources (Enkel et al., 2009). On the other hand, the inside-out process aims to make the company more profitable by proposing innovative ideas, commercializing intellectual property (IP), and expanding technology by interacting with the external environment (Enkel et al., 2009) . The combination of the above processes constitutes a coupled innovation process that simultaneously applies the inbound and outbound processes. This can be achieved mainly through the cooperation of complementary partners (joint ventures, alliances) (Enkel et al., 2009). This research focuses on the coupling process, as this has been applied to and tested in case studies. In the following chapters, the coupling process is described in more detail. 2.3.2 Elements of the coupled innovation process Coupled innovation refers to innovation in cooperation with complementary partners. These partnerships can be formulated as joint ventures and alliances. By coupling the innovation process, the company gains inter-company relationships. In this way, their R&D departments collaborate to develop complementary technologies (Mazzola et al., 2012). Through cross-organizational cooperation in its R&D department, the company is able to explore new opportunities and technologies (Ebersberger et al., 2010). Technology collaboration networks and R&D alliances are important factors for companies trying to achieve better results in product innovation (Nieto and Santamaria, 2007). In addition, Lecocq and Looy (2009) pointed out that according to recent research, which is based on a broad review of quantitative empirical research, R&D alliances appear to be a more effective strategy than mergers and acquisitions in terms of improving the company's innovation performance. Read Less